CASE 9.1: ALLIED NOVELTY COMPANY Background Allied Novelty Company markets a bro

Question

CASE 9.1: ALLIED NOVELTY COMPANY

Background

Allied Novelty Company markets a broad mix of toys and games to retailers throughout the United States. The salesforce is organized into five regions, each comprised of five districts. A national sales executive oversees the five regional sales managers. Each regional manager is responsible for the effectiveness of his or her region and is compensated according to the achievements of their region.

Current Situation

Kerri Ross is the northern region sales manager for Allied Novelty. The fiscal year just ended, and Kerri has compiled data to help her analyze her region’s effectiveness. Although her region has had what she believes to be a very successful year, she wants to analyze each district closely. She hopes to use her analysis to identify and correct problems. Moreover, she needs to complete her analysis for her upcoming meeting with her national sales manager, Greg Rich. Market shares for each district were fairly sizable (30 percent, 32 percent, 34 percent, 31 percent, and 28 percent for districts 1 through 5, respectively) at the beginning of the fiscal year. Kerri had expected these to remain relatively stable over the past year. The company had anticipated a sales growth of 2 percent. In addition, selling costs were budgeted at 10 percent of forecasted sales. If Kerri’s region did not increase sales by 2 percent and stay within the sales budget, her performance appraisal, and subsequently her compensation, would suffer. Kerri knew her boss would carefully scrutinize her analysis. She hoped to be able to identify any problem areas so that she could develop solutions and implement them in the upcoming year. She was scheduled to meet with Rich in three days. Kerri compiled the following information (shown in the table below).

Questions

What analyses should Kerri perform with this data? Conduct these suggested analyses being careful to document your work and your answers.

What problems can you identify from your analyses?

What solutions would you recommend to solve these problems and improve sales effectiveness in the future? Explain why your recommendations are appropriate.

Explanation / Answer

Kerri should perform a productivity analysis with her data since her basic job is to manage salespeople and their performance.The best way to do this is to analyze each district and compare the sales and numbers. It District 4 they have total industry sales of 91,667, which is the largest out of all the 5 districts. They’re numbers within the cost of goods sold reflect this number as they are almost doubling their numbers from their lowest competitor district one. This is also because they have the largest number of salespeople as well to push sales.

I can see that the other districts are in need of salespeople. It is difficult to reach a goal when the market is not staffed properly. The highest and lowest district has a difference of 8 people as salespeople.

To improve I would raise district 1’s salespeople to 18 and calculate if that would increase the sales margin for that area. If it does I would continue to raise the other districts and monitor they’re performance value to their sales.

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